There is debate in the eastern Canadian province of New Brunswick (NB) about whether to develop facilities for liquid natural gas (LNG) or hydrogen, in order to serve the energy demands of Europe. While there are advantages and disadvantages to each option, ultimately environmental concerns may determine the result.

The potential for economic development through exporting energy was highlighted by German Chancellor Olaf Scholz during his recent visit to Canada. Scholz is looking for alternate sources of energy to replace dwindling supplies of Russian natural gas. Russia has dramatically reduced the supply of natural gas to Europe through the Nord Stream 1 pipeline in response to western sanctions over the invasion of Ukraine.

LNG and hydrogen are being promoted in two different NB ports. In Saint John, located on NB’s south shore, there is strong political support for the expansion of a terminal to ship LNG across the Atlantic. In contrast, the port of Belledune, on NB’s north shore, is prepared to expand facilities to produce hydrogen for export. David Coon, leader of the NB’s Green Party, opposes exporting LNG because that will increase the production of greenhouse gasses.   

While hydrogen is the greener option, the technology for developing hydrogen is not as tested as the technology for LNG. Therefore, LNG may be the best option for meeting any immediate energy needs. Edward Greenspon, President of Canada’s Public Policy Forum explains: “Gas is in the here and now, and it’s proven.” Hydrogen “is looked on favourably as a fuel of the future, but it has a lot of hurdles to cross on the way to that future.”

However, there are significant practical problems, even in the short-term, in exporting LNG from Canada to Europe. The most obvious, as noted by Canadian Prime Minister Justin Trudeau during Scholz’s visit, is that the supply of LNG in western Canada is a long way from the ports on the east coast which would result in significant costs to transfer it by pipeline. Furthermore, there is no liquefaction terminal on the east coast, which is required to cool gas into a liquid form to make it safe for export overseas. 

As a result, Trudeau sees no business case for incurring such costs and concedes that Canada may be able to help with immediate energy needs only by contributing to the global energy supply, thereby freeing up others to provide energy resources to Europe.  

With no short-term option for supplying LNG directly to Europe, the greener hydrogen option looks like the best way forward for NB. German environmentalists are pressuring Scholz’s government coalition, which includes the Green Party, to reject any Canadian energy that emits carbon dioxide. Therefore, with an eye to the German market, the Belledune Port Authority has proposed a facility that will use renewable electricity to create hydrogen through electrolysis of water, which leaves only oxygen as a by-product.  This “green” hydrogen is being touted as a long-term solution to replace fossil fuels. It produces no emissions when created by renewable energy sources and can be converted into ammonia, which is dense and can be shipped long distances.

The Belledune option meets environmental concerns, which are increasingly central to business imperatives. Gone are the days when it was assumed that what is good for the environment is bad for the economy. More contemporary thinking is explained by Alex LeBlanc, CEO of the NB Business Council: “The market signals and drives are clearly shifting. Businesses understand that sustainability is not simply a corporate social imperative. It’s a business imperative that directly impacts their competitiveness and resiliency.” 

David Arnott

David Arnott of Toronto, recent graduate of Political Science from McGill University.

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